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Published on 29/07/2019 10:49:14 AM | Source: Yes Securities Ltd

Buy Can Fin Homes Ltd For The Target Rs.450 - Yes Securities

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A strong quarter

Healthy loan growth - product profile unchanged, sustained strong growth in SENP segment and outside Karnataka

Can Fin witnessed a marginal improvement in loan growth to 17.3% yoy (from 16.8% yoy in Q4 FY19), aided by a healthy 10% yoy growth in disbursements (average growth of 6% in preceding 8 quarters) and lower portfolio run-off (annualized rate of 14%) due to significant reduction in BT. Home Loans (90% of loan book) grew 16.5% yoy, with self-employed HL portfolio growing at 24% compared to 14% growth in the salaried HL book. Self-employed customers’ share in company’s HL book has now risen to 27%, as compared to 23% as of Q1 FY18. The home state of Karnataka witnessed a slightly improved growth of ~7% yoy. Excluding Karnataka, Can Fin’s loan assets grew by strong 22-23% yoy. While Topup personal loans and Loan for Sites continue to grow faster than the entire book, their aggregate contribution remains small at 5%.

 

Portfolio diversification continues - shift towards Tier 2/3 cities and Non-South regions

With competition from banks heating-up and BT intensity rising in the metros and major Tier-1 cities, Can Fin has been expanding its presence in important Tier 2/3 growth markets (non-Metro locations). Accordingly, the share of these markets in fresh approvals and loan book has risen to 44% and 34% respectively. The Non-Metro portfolio of the company grew by 30% yoy as compared to 11% growth in the Metro book. Out of the 65 new branches added by Can Fin since FY16, 53 were added in non-Metro locations. Contribution of non-South regions in approvals increased 33% for Q4 FY19 (23% in FY16) and its share in loan book rose to 29% v/s 24% as of FY16. Since FY16, Can Fin has added 30 branches in the non-South region.

 

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